Crude prices surged toward 100 U.S. dollars a barrel Tuesday due to the weak dollar and concerns about a tight energy supply this winter.
Light sweet crude for January delivery jumped 3.39 dollars to 98.03 dollars per barrel, after earlier hitting 98.50 dollars on the New York Mercantile Exchange.
In London, Brent North Sea crude for January delivery surged 3.21 dollars to 95.49 dollars a barrel.
Weak dollar
Crude prices had traded as high as 98.62 dollars a barrel earlier this month amid a surge in speculative investment and the weakness of the dollar against other major currencies. On Tuesday, crude prices resumed their march toward 100 dollars.
"There is a cornucopia of reasons as to why oil is trading above 98 dollars today. Among these is the speculation that tomorrow's inventory number would actually show a decline in oil stocks and even reports of a fire at an oil sands plant in Canada," Wall Street Strategies' senior research analyst Conley Turner told Xinhua.
"However, the compelling reason propelling the price upward has to do with the fact that the U.S. dollar set a new record today as it hit an all-time low against the euro and Swiss franc," he added.
The dollar declined against most major currencies Tuesday, with the steepest drop against the euro. The euro reached a record high of 1.482 dollars.
"The price of oil has an inverse relationship to the value of the dollar and oil futures offer a hedge against the declining currency. The dollar is maintaining its secular downtrend as the expectation in the market is that the Federal Reserve would once again have to cut interest rates in order to stave off a recession," said Turner.
Tight supply
Worries about falling crude stocks in consumer nations also stirred the prices to a higher lever.
In a call to the Organization of the Petroleum Exporting Countries (OPEC), U.S. Energy Secretary Sam Bodman, who asked for a boost in output, said that crude oil stockpiles in OECD (Organization for Economic Cooperation and Development) countries have fallen to about 100 million barrels below the five-year average.
However, the OPEC declaration on Sunday after the meeting did not intend to raise output but urge world peace and the fight against global warming.
The U.S. Energy Information Administration will release its weekly inventory statistics on Wednesday morning. The data is expected to show a 300,000-barrel drop in distillate inventories and an 800,000-barrel increase in gasoline stocks.
"We already had the requisite pull back in price when oil was around this level in the last two weeks. Now the 100-dollar psychological target is clearly palpable among traders and the momentum is in favor of that target being breached sooner rather than later," Turner said.
(Xinhua News Agency November 21, 2007)
